Where's the beef?

Recently economist Dr. Daryll E. Ray, University of Tennessee, reported on a group led by the Grocery Manufacturers Association that held a press conference at the National Press Club under the banner of "Food Before Fuel," urging the incoming Obama administration to end subsidies on ethanol.

The day after the GMA meeting, Secretary of Agriculture Ed Schafer addressed the Cellulose Ethanol Summit in Florida. In his address, Schafer stated, "GMA and others would like to see this industry move backward."

Then on the following page the secretary tried to convince the members that ethanol had not increased the price of food. He said the prices of cereals produced by the American Bakers Association had increased 288 percent in the past 30 years, but the farm share of the retail price had fallen from 14 percent in 1979 to 6 percent in 2005.

The amazing thing was that the secretary of agriculture apparently did not know that the small amount of corn used in cereals is not even 1 percent. He did not even mention that corn is the basic food for animals that supply us with milk, eggs, cheese, ham, bacon, beef, chickens and many more essential foods. Or that the price of wheat, milo, rice soybeans and cotton all compete with corn for cultivated acres. Or that their price goes up in direct proportion to corn.

Last summer Ron Plains, University of Missouri economist, in a presentation to the Missouri Pork Producers said, "It's not food made from corn. It's the food made from animals that eat corn that increases in price" (when corn prices increase). When the price of corn increases, feed lots have to pay less for calves to break even. Plains said that for every dime increase in the price of corn, there is a $5 drop in the price feedlots can pay for feeder cattle.

Dr. Tom Troxel, Extension Service and associate head of the Animal Science Department at the University of Arkansas, reported, "Cattle feeders have lost $25 to nearly $175 per head over the past year," and "due to recent decline in calf prices, cow-calf producers' losses in 2008 may be higher than $30 per cow."

Needless to say, cow-calf producers, feedlots, dairies and pork, poultry and other producers are not going to stay in business and lose money, As profit decreases, so will supply. As supply decreases, prices will increase. The price of beef, however, will not fully increase until 2008 calves reach the market in 2009.

Since the market adjustment time for milk, eggs and butter is much shorter than beef and pork, I did a little research to determine my cost increase from 2005 to the present.

20052008+%

Medium eggs66 cents/dozen$1.55/dozen58

Butter$1.40/pound$2.39/pound42

2% milk$2.23/gallon$3.59/gallon38

In view of the above, consumers (taxpayers) are getting a double whammy, paying almost double in food cost and millions in subsidies and tax breaks to the oil companies and ethanol producers for an expensive, inefficient product that is mandated to be added to our cheaper, more efficient gasoline.

Proponents of ethanol will argue that it helps the economy of the corn farmer and cuts down on the subsidies paid to row-crop farmers. True, but they say nothing about playing havoc and potential destruction of the economy of the beef cattle, dairy, pork and poultry industries, and they only talk about raising the price of cereal a few cents per box.

Jack H. Knowlan Sr. is a Jackson resident.